Raw and white sugar futures fell on Wednesday, pressured by India Farm Minister Sharad Pawars comments that India may not need white sugar imports at zero duty as local prices had fallen. Coffee prices were little changed, underpinned by a weaker dollar against a basket of currencies, while ICE cocoa eased back slightly as both markets sought to consolidate after rising sharply during last couple of weeks.
Sugar futures headed swiftly lower after the ministers comments in an interview with Reuters. Traders bought white sugar futures earlier this month on expectations the Indian government might scrap the 60 percent import duty on white sugar.
India is the worlds biggest sugar consumer and the second biggest producer of the sweetener after Brazil. Both raw and white sugar futures fell after the ministers comments, which European traders interpreted as bearish as they signalled that India would not need to buy as much sugar on the international market as previously anticipated.
"Its no surprise the market is lower," said Nick Hungate, a soft commodities trader with Rabobank in London, referring to the Reuters report. Benchmark ICE May raw sugar futures stood 0.17 cent lower at 12.83 cents per lb at 1750 GMT, while London May white sugar settled $4.10 down at $393.90 per tonne.
Morgan Stanley said on Wednesday it had raised its estimate for the world sugar deficit in 2008/09 to 7.9 million tonnes from a previous projection of a deficit of 1.8 million tonnes. Cocoa futures on ICE were lower while prices in London were supported by the weakness of sterling. May cocoa in London ended 1 pound lower at 1,920 pounds a tonne. The contract had traded as low as 1,656 pounds about a month ago. May cocoa on ICE settled $23 lower at $2,586 a tonne.
Coffee prices were marginally down with the run-up in prices showing signs of stalling, dealers said. May arabicas on ICE were off 0.10 cent at $1.1665 per lb, still far above a contract low of $1.0435 set on March 9. May robustas in London ended $7 lower at $1,569 a tonne.
"The continued strong consumption of coffee and the expected market deficit point to a further rise in prices in the medium term," Commerzbank said in a report on Wednesday. "We expected arabica to cost 130 cents a pound and robustas $1,900 a tonne at the end of the year," the report added.